EXHIBIT 10.1
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of
September 30, 2001, is by and between Urecoats Industries Inc., a Delaware
corporation, with its principal place of business at 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxx, Xxxxx 000, Xxxxxxxxx Xxxxx, Xxxxxxx 00000 (the "COMPANY"), and Xxxxxxx
X. Xxxxx, with a residence at Xxxx Xxxx Xxxx, Xxxxxx, Xxx Xxxxxx 00000 (the
"BUYER").
WHEREAS:
A. The Company and the Buyer are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "ACT");
B. The Company has authorized the following new series of its preferred
stock, $1.00 par value per share: the Series B convertible preferred stock (the
"SERIES B PREFERRED STOCK"), which shall be convertible into restricted shares
of the Company's Common Stock, $.01 par value per share (the "COMMON STOCK") (as
converted, the "CONVERSION SHARES"), at the conversion rate (set forth below) in
accordance with terms of the Company's Certificate of Designation in the form
attached hereto as EXHIBIT A (the "CERTIFICATE OF DESIGNATION"). The stated
value per share of Series B Preferred Stock shall be $5.00, which includes the
$1.00 par value per share. The Series B Preferred Stock and the Conversion
Shares are collectively referred to in this Agreement as the "SECURITIES";
C. The Buyer wishes to purchase and the Company desires to sell an
aggregate of 375,245 shares of Series B Preferred Stock for a total of
$1,876,225, upon the terms and conditions stated in this Agreement.
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF SERIES B PREFERRED STOCK.
a. PURCHASE OF SERIES B PREFERRED STOCK. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6 and 7(a)
below, the Company shall issue and sell to the Buyer and the Buyer shall
purchase from the Company, for an aggregate of $1,876,225 an aggregate of
375,245 shares of Series B Preferred Stock (the "CLOSING"). On the Closing
Date, subject to receipt of the agreed upon consideration, the Company shall
cause to be delivered to Buyer a stock certificate representing the number of
shares of Series B Preferred Stock that Buyer is then purchasing, duly executed
on behalf of the Company and registered in the name of the Buyer or his
designee (the "STOCK CERTIFICATE").
b. CLOSING DATE. The date and time of the Closing (the "CLOSING
DATE") shall be 10:00 a.m. Eastern Daylight Time on September 30, 2001, subject
to satisfaction (or waiver) of the conditions to the Closing set forth in
Sections 6 and 7(a) below (or such later date as is mutually agreed to by the
Company and the Buyer).
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c. FORM OF PAYMENT. On the Closing Date, Buyer shall cancel
indebtedness in the form of short-term loans bearing interest at 9% per annum
owed by Company to Buyer in payment of the applicable purchase price for the
Series B Preferred Stock to be issued and sold to Buyer at the Closing.
2. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants with respect to only himself that:
a. INVESTMENT PURPOSE. Such Buyer (i) is acquiring the Series B
Preferred Stock and (ii) upon conversion of the Series B Preferred Stock, will
acquire the Conversion Shares, then issuable for his own account for investment
only and not with a view towards, or for resale in connection with, the
unlawful public sale or distribution thereof, except pursuant to sales of such
shares which are the subject of an effective registration statement duly filed
under the Act or otherwise exempted under the Act and all applicable state blue
sky laws; provided, however, that by making the representations herein, such
Buyer does not agree to hold any Securities for any minimum period or other
specific term and reserves the right to dispose of the Securities at any time
in accordance with or pursuant to a registration statement or an exemption
under the Act and all applicable state blue sky laws.
b. ACCREDITED INVESTOR STATUS. Buyer is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Act ("REGULATION
D").
c. RELIANCE ON EXEMPTIONS. Buyer understands that the
Series B Preferred Stock is being offered and sold to him in reliance on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon the truth
and accuracy of, and Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of Buyer set forth herein in
order to determine the availability of such exemptions and the eligibility of
Buyer to acquire the Series B Preferred Stock.
d. INFORMATION. Buyer acknowledges that he is the Chairman of
the Board of Directors of the Company and as such has been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Series B Preferred Stock that
have been requested by Buyer. No independent due diligence investigations
conducted by Buyer shall modify, amend or affect Buyer's right to rely on the
Company's representations and warranties contained in Section 3 below.
e. NO GOVERNMENTAL REVIEW. Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Series B
Preferred Stock and the Warrants or the fairness or suitability of the
investment in the Securities nor have such authorities passed upon or endorsed
the merits of the offering of the Series B Preferred Stock.
f. TRANSFER OR RESALE. Buyer understands that the: (i)
Securities have not been and are not being registered under the Act or any
state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) (i) they have been subsequently registered thereunder
and (ii) they are offered for sale, sold, assigned and transferred in
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compliance with the prospectus delivery requirements of the Act; or (B) Buyer
shall have delivered to the Company an opinion of counsel, in a generally
acceptable form, to the effect that such securities to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an exemption
from such registration.
g. LEGENDS.
(i) Buyer understands that the certificates or other
instruments representing the Series B Preferred Stock and, until such time as
the sale of the Conversion Shares have been registered under the Act, the
stock certificates representing the Conversion Shares, except as set forth
below, shall bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of such stock
certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.
(ii) Each certificate for Series B Preferred Stock shall also
bear the following legend:
ANY TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW
THE TERMS OF THE COMPANY'S CERTIFICATE OF DESIGNATIONS
RELATING TO THE SERIES B PREFERRED SHARES REPRESENTED BY
THIS CERTIFICATE, INCLUDING SECTION 2(b)(iv) THEREOF. THE
NUMBER OF SERIES B PREFERRED SHARES REPRESENTED BY THIS
CERTIFICATE MAY BE LESS THAN THE NUMBER OF SUCH SHARES
STATED ON THE FACE HEREOF.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Buyer as set forth in this Section 3.
a. ORGANIZATION AND QUALIFICATION. The Company and its
subsidiaries are duly organized and validly existing in good standing under the
laws of the jurisdiction in which they are organized, and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly qualified to
do business and is in good standing in every jurisdiction in which the nature of
the business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. "MATERIAL ADVERSE EFFECT" means any material adverse
effect on (i) the business, properties, operations, condition (financial or
otherwise), results of operations or objective prospects of the Company and its
subsidiaries taken as a whole, (ii) on the ability of the Company to perform its
obligations hereunder, under the Certificate of Designation or under the
agreements or instruments to be entered into or filed in connection herewith or
therewith, or (iii) the Securities.
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b. AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER
INSTRUMENTS. (i) The Company has the requisite corporate power and authority to
enter into and perform its obligations under this Agreement, to issue, sell and
perform its obligations with respect to the Series B Preferred Stock in
accordance with the terms hereof, the Certificate of Designation and to issue
the Conversion Shares upon conversion of the Series B Preferred Stock in
accordance with the Certificate of Designation, (ii) the execution and delivery
of this Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby, including without limitation the issuance of
the Series B Preferred Stock and the issuance of the Conversion Shares issuable
upon conversion of the Series B Preferred Stock in accordance with the terms of
the Certificate of Designation, have been duly authorized by the Company's Board
of Directors and no further consent or authorization is required by the Company,
its Board of Directors or its shareholders, (iii) this Agreement and the
certificates for the Series B Preferred Stock have been duly executed and
delivered by the Company, (iv) this Agreement and the certificates for the
Series B Preferred Stock constitute the valid and binding obligations of
the Company enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies, and (v) the Certificate of Designation will have been filed
with the Secretary of State of the State of Delaware within thirty (30) days
after the Closing date hereof and will be in full force and effect, enforceable
against the Company in accordance with its terms.
c. CAPITALIZATION. As of September 30, 2001, the authorized
capital stock of the Company consists of 142 million shares, of which 140
million are for Common Stock and 2 million for preferred stock. No shares of
Common Stock or preferred stock are subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by the
Company. There are no securities or instruments containing anti-dilution or
similar provisions that will be triggered by the issuance of any of the
Securities as described in this Agreement. The Company has furnished to the
Buyer true and correct copies of the Company's Restated Certificate Articles of
Incorporation, as amended, and as in effect on the date hereof (the "RESTATED
CERTIFICATE OF INCORPORATION"), and the Company's Bylaws, as in effect on the
date hereof (the "BYLAWS"), and the terms of all securities convertible into or
exercisable for Common Stock and the material rights of the holders thereof in
respect thereto.
d. ISSUANCE OF SECURITIES. The Securities are duly authorized
and, upon issuance in accordance with the terms hereof, shall be (i) validly
issued, fully paid and non-assessable, (ii) free from all taxes, liens and
charges with respect to the issue thereof and (iii) entitled to the rights and
preferences set forth in the Certificate of Designation. As of the date hereof,
the Company does not have authorized nor has it reserved any Common Stock,
solely for the purpose of effecting the conversion of the Series B Preferred
Stock. The Company is obligated to take all steps necessary to enable it to
fulfill the conversion obligations hereunder prior to the expiration of the
Mandatory Conversion Date (as such is defined in the Certificate of Designation)
under the Certificate of Designation. Upon conversion in accordance with the
Certificate of Designation, the Conversion Shares will be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof, with the holders being entitled to all rights accorded to
a holder of Common Stock.
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e. NO CONFLICTS. Except as otherwise expressly stated herein,
the execution, delivery and performance of this Agreement, the performance by
the Company of its obligations under the Certificate of Designation and the
consummation by the Company of the transactions contemplated hereby and thereby
will not (i) result in a violation of the Restated Certificate of Incorporation,
as amended, any Certificate of Designation, Preferences and Rights of any
outstanding series of preferred stock of the Company or Bylaws or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the principal market or exchange on which the Common Stock is
traded or listed) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its subsidiaries is bound
or affected. Neither the Company nor its subsidiaries is in violation of any
term of or in default under its Restated Certificate of Incorporation, as
amended, or Articles of Incorporation, as amended, as applicable, any
Certificate of Designation, Preferences and Rights of any outstanding series of
preferred stock of the Company or Bylaws or their organizational charter or by-
laws, respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order (collectively referred to as
the "MATERIAL CONTRACTS") or any statute, rule or regulation applicable to the
Company or its subsidiaries. The business of the Company and its subsidiaries
is not being conducted, and shall not be conducted, in violation of any material
law, ordinance or regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the Act and applicable blue
sky laws, the Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental or
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by this Agreement or
perform its obligations under the Certificate of Designation in accordance with
the terms hereof or thereof.
f. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since January 20, 1997,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT") (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
DOCUMENTS"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents.
As of their respective dates, the financial statements of the Company included
in the SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently applied
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
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operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
g. ACKNOWLEDGMENT REGARDING BUYERS' PURCHASE OF THE SERIES B
PREFERRED STOCK. Purchaser's status as Chairman of the Board of Directors and
holder of more than ten percent (10%) of the Company's outstanding shares, the
Company acknowledges and agrees that for purposes hereof, Buyer is acting in the
capacity of an arm's length purchaser with respect to this Agreement and the
Certificate of Designation and the transactions contemplated hereby and thereby.
The Company further acknowledges that for the purposes hereof, Buyer is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the Certificate of Designation and
the transactions contemplated hereby and thereby and any advice given by Buyer
or any of his representatives or agents in connection with this Agreement and
the Certificate of Designation and the transactions contemplated hereby and
thereby is merely incidental to Buyer's purchase of the Series B Preferred
Stock. The Company further represents to Buyer that the Company's decision to
enter into this Agreement has been based solely on the independent evaluation by
the Company and its representatives.
h. NO GENERAL SOLICITATION. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Act) in connection with the offer or sale of any of the
Securities offered hereby.
i. NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the Act or cause the offering of any of the Securities
to be integrated with prior offerings by the Company for purposes of the Act or
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated, nor will
the Company or any of its Subsidiaries take any action or steps that would
require registration of the issuance by the Company of any of the Securities
under the Act or cause the offering of the Securities to be integrated with
other offerings.
j. INTELLECTUAL PROPERTY RIGHTS. The Company and its
subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights (collectively "INTELLECTUAL PROPERTY
RIGHTS") necessary to conduct their respective businesses as now conducted and
as presently contemplated to be operated in the future except for Intellectual
Property Rights that, individually or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect.
k. LEASES. Any real property and facilities held under lease by
the Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases.
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l. INSURANCE. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as is prudent and customary in the businesses in
which the Company and its subsidiaries are engaged. Neither the Company nor any
such subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not individually or in the aggregate have a
Material Adverse Effect.
m. INTERNAL ACCOUNTING CONTROLS. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
n. TAX STATUS. The Company and each of its subsidiaries has made
or filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim. The Company has
not been notified that any of its tax returns is currently being audited by any
taxing authority.
o. DILUTIVE EFFECT. The Company understands and acknowledges
that its obligation to issue Conversion Shares upon conversion of the Series B
Preferred Stock in accordance with this Agreement and the Certificate of
Designation is absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interest of other stockholders of the
Company.
4. COVENANTS AND AGREEMENTS.
a. BEST EFFORTS. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.
b. BLUE SKY. The Company shall take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for or
to qualify the Securities for, or obtain exemption for the Securities for, sale
to Buyer pursuant to this Agreement under applicable securities or "Blue Sky"
laws of the State of New Jersey. The Company shall make all filings and reports
relating to the offer and sale of the Securities required under applicable
securities or "Blue Sky" laws of the State of New Jersey wherein the Buyer
resides.
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c. FINANCIAL INFORMATION. The Company agrees to file all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Exchange Act so
long as the Series B Preferred Stock shall be outstanding and unconverted. The
financial statements of the Company will be prepared in accordance with
generally accepted accounting principles, consistently applied, and will fairly
present in all material respects the consolidated financial position of the
Company and its consolidated subsidiaries and results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
d. NONRESERVATION OF SHARES. As of the date hereof, the restated
certificate of incorporation, as amended, of the Company does not have
authorized, nor has the Company reserved the requisite number of shares of
Common Stock, for the purpose of effecting the conversion of the Series B
Preferred Shares. The Company has covenanted to take all steps necessary to
enable the Company to fulfill the conversion obligations hereunder prior to
expiration of the Mandatory Conversion Date (as such is defined in the
Certificate of Designation). If, for reasons beyond its control, the Company
does not have the power and authority to issue Common Stock pursuant to a
Holder's Conversion Notice after 180 days from the Initial Issuance Date up to
and including the Mandatory Conversion Date, the Mandatory Conversion Date shall
be automatically extended for additional and successive one year periods until
such time that Common Stock becomes available for issuance. There shall be no
penalty for the Company's inability to convert at any time for failure to
fulfill any Holder's Conversion Notice.
e. FILING OF FORM 8-K. As soon as practicable after the Closing
Date, the Company will file a Form 8-K with the SEC with respect to the issuance
of the Securities at such Closing and the transactions contemplated by this
Agreement. Such filing shall contain appropriate disclosure of the terms and
conditions of the issuance of the Securities and shall include as exhibits forms
of the Agreement and Certificate of Designation.
f. CORPORATE EXISTENCE. So long as any Buyer beneficially owns
any Securities pursuant to this Agreement, the Company shall maintain its
corporate existence in good standing under the laws of the jurisdiction in which
it is incorporated and shall not sell all or substantially all of the Company's
assets, except in the event of a merger or consolidation or sale of all or
substantially all of the Company's assets for cash, or, if for securities, where
the surviving or successor entity in such transaction either (i) redeems all of
the then outstanding Series B Preferred Stock in accordance with and subject to
the terms of the Certificate of Designation applicable to such transactions, or
(ii) assumes the Company's obligations hereunder and under the agreements and
instruments entered into in connection herewith.
g. INSURANCE. The Company shall maintain liability, casualty and
other insurance (subject to customary deductions and retentions) with
responsible insurance companies against such risk of the types and in the
amounts customarily maintained by companies of comparable size to the Company.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of
the Company hereunder to issue and sell the Series B Preferred Stock to Buyer at
the Closing is subject to the satisfaction of each of the following conditions,
provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion:
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a. Buyer shall have executed this Agreement and delivered the
same to the Company.
b. Buyer shall have delivered to the Company the applicable
purchase price for the Series B Preferred Stock being purchased by Buyer at
Closing.
c. A Merger Transaction (as defined in the Certificate of
Designation) pursuant to which all of the outstanding Series B Preferred Stock
shall have been converted or redeemed shall not have been consummated.
d. The representations and warranties of Buyer shall be true and
correct in all material respects as of the Closing Date as though made at that
time (except for representations and warranties that speak as of a specific
date), and Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by Buyer at or prior to
the Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
a. CLOSING DATE. The obligation of Buyer hereunder to purchase
the Series B Preferred Stock at the Closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions, provided that
these conditions are for Buyer's sole benefit and may be waived by such Buyer at
any time in his sole discretion:
i. The Company shall have executed this Agreement and
delivered the same to such Buyer.
ii. The Certificate of Designation shall have been executed
by the Company and filed with the Secretary of the State of Delaware, and a copy
marked as filed shall have been delivered to such Buyer.
iii. The representations and warranties of the Company shall
be true and correct in all material respects (except to the extent that any of
such representations and warranties is already qualified as to materiality in
Section 3 above, in which case such representations and warranties shall be true
and correct without further qualification) as of the Closing Date as though made
at that time (except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Company at or
prior to the Closing Date. Buyer shall have received a certificate, executed by
the President of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by Buyer.
iv. Buyer shall have received the opinion of the Company's
counsel dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to Buyer and in substantially the form of EXHIBIT B attached
hereto.
v. The Company shall have executed and delivered to Buyer the
Stock Certificates (in such denominations as such Buyer shall request) for the
Series B Preferred Stock being purchased by Buyer being given at the Closing.
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vi. The Board of Directors of the Company shall have adopted
the resolutions in substantially the form of EXHIBIT C attached hereto (the
"RESOLUTIONS").
vii. The Company shall have delivered to Buyer a secretary's
certificate certifying as to (A) the Resolutions, (B) copies of its Restated
Certificate of Incorporation and (C) By-laws, each as in effect at the Closing.
viii. The Company shall have delivered to Buyer such other
documents relating to the transactions contemplated by this Agreement as Buyer
may reasonably request.
ix. The transactions contemplated hereby shall not violate
any law, regulation or order then in effect and applicable to Buyer or the
Company.
8. INDEMNIFICATION. In consideration of each Buyer's execution and
delivery of this Agreement and acquiring the Securities hereunder and in
addition to all of the Company's other obligations under this Agreement, the
Company shall defend, protect, indemnify and hold harmless Buyer and each other
holder of Securities from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether Buyer is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "BUYER INDEMNIFIED
LIABILITIES"), incurred by Buyer (and shall advance the same) as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in this Agreement, the
Certificate of Designation or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement, the Certificate of
Designation or any other certificate, instrument or document contemplated hereby
or thereby, or (c) any cause of action, suit or claim brought or made against
Buyer and arising out of or resulting from the execution, delivery, performance
or enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by the Buyer. Promptly after receipt by Buyer of
notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving the Buyer Indemnified
Liabilities , Buyer shall deliver to the Company a written notice of the
commencement thereof, and the Company shall have the right to participate in,
and, to the extent it so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
selected by the Company and reasonably satisfactory to Buyer; provided, however,
that Buyer shall have the right to retain its own counsel with the fees and
expenses to be paid by the Company, if, in the reasonable opinion of counsel
retained by the Company, the representation by such counsel of the Buyer and the
Company would be inappropriate due to actual differing interests between Buyer
and any other party represented by such counsel in such proceeding. The Buyer
shall cooperate fully with the Company in connection with any negotiation or
defense of any such action or claim by the Company and shall furnish to the
Company all information reasonably available to the Buyer which relates to such
action or claim. The Company shall keep the Buyer fully apprised at all times
as to the status of the defense or any settlement negotiations with respect
thereto. The Company shall not be liable for any settlement of any action, claim
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or proceeding effected without its written consent, provided, however, that the
Company shall not unreasonably withhold, delay or condition its consent. The
Company shall not, without the consent of the Buyer, consent to entry of any
judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
Buyer of a release from all liability in respect to such claim or litigation.
Following indemnification as provided for hereunder, the Company shall be
subrogated to all rights of the Buyer with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the Company within a reasonable time of
the commencement of any such action shall not relieve it of any liability to the
Buyer, except to the extent that the Company is prejudiced in its ability to
defend such action. To the extent that the foregoing undertaking by the Company
may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Buyer Indemnified
Liabilities which is permissible under applicable law.
9. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of laws.
b. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party, PROVIDED THAT a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. HEADINGS. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
documents referred to herein, supersede all other prior or contemporaneous oral
or written agreements between or among the Buyer, the Company, their affiliates
and persons acting on their behalf with respect to the matters discussed herein,
and this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor Buyer makes any representation, warranty, covenant or undertaking
with respect to such matters. No provision of this Agreement may be waived or
amended other than by an instrument in writing signed by the Company and the
holders of at least 2/3 of the then outstanding Series B Preferred Stock, but
any such waiver or amendment shall bind all Buyers and holders.
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f. NOTICES. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile,
provided a copy is mailed by U.S. certified mail, return receipt requested;
(iii) three (3) business days after being sent by U.S. certified mail, return
receipt requested, or (iv) one (1) business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:
if to the Company:
Urecoats Industries Inc.
0000 Xxxx Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Corporate Secretary
with a copy to:
Xxxxxx X. Xxxxx, PLLC
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000)000-0000
Facsimile: (000)000-0000
Attention: Xxxxxx X. Xxxxx, Esquire
if to the Buyer:
Xxxxxxx X. Xxxxx
Xxxx Xxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (212) 768-2561
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Securities. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of 2/3 of the Series B Preferred Stock then
outstanding. A Buyer may assign some or all of its rights hereunder without the
consent of the Company, PROVIDED, HOWEVER, that (i) any such assignment shall
not release such Buyer from its obligations hereunder unless such obligations
are assumed by such assignee and the Company has consented to such assignment
and assumption, which consent shall not be unreasonably withheld; (ii) Buyer may
not assign his purchase or other rights hereunder in a manner that would cause
the offering of Securities hereunder to be required to be registered under the
Act; (iii) Buyer may not assign his purchase or other rights with respect to the
Series B Preferred Stock; and (iv) Buyer may not assign his rights hereunder to
an entity that in the good faith judgment of the Board of Directors of the
Company is competitive with a core business of the Company.
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h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. SURVIVAL. The representations and warranties of the Company
and the Buyer contained in Sections 3 and 2, respectively, shall survive the
Closing until three years after the Closing Date, including, without limitation,
all financial statements thereto. The agreements and covenants set forth in
Sections 4, 5 and 9, and the indemnification provisions set forth in Section 8,
shall survive the Closing. Buyer shall be responsible only for his own
representations, warranties, agreements and covenants hereunder.
j. FURTHER ASSURANCES. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
k. NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
l. GOVERNING LAW; JURISDICTION; JURY TRIAL. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(other than Section 5-1401 of the New York General Obligations Law and whether
of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.
Each party hereby irrevocably submits to the non-exclusive jurisdiction of the
state and federal courts sitting in The City of New York, borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
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m. REMEDIES. Buyer and each holder of the Securities shall have
all rights and remedies set forth in this Agreement and the Certificate of
Designation and all rights and remedies which such holders have been granted at
any time under any other agreement or contract and all of the rights which such
holders have under any law. Any person having any rights under any provision of
this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by law.
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
URECOATS INDUSTRIES INC. XXXXXXX X. XXXXX
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxx
---------------------- ---------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxx
Title: President Title: Investor
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